Great news: Obama’s student-loan changes puts $8 in borrower pockets per month

Ed Morrissey
HotAir.com
10/27/2011

In trying to contrast himself with a supposedly balky Congress, Barack Obama has rolled out the first two in a series of unilateral executive actions to “heal this economy.”  The first attempted to rescue homeowners from foreclosures by refinancing mortgages that are, er, current with their payments.  The second adjusted caps on student-loan payments in an effort to give college graduates more money to spend each month.  More disposable cash means more spending, which in a consumer-driven economy means growth … right?

In theory, yes.  But buying an extra four Slurpees a month probably won’t cut it.  The Atlantic runs the numbers on Obama’s changes, and finds that Obama must have meant change literally.  The most significant change announced was the ability to consolidate balances and trim the interest rates on the loans, a change that applies to all student loans, not just direct loans.  So how much will this consolidation save former students?  Two Starbucks lattes at best (via Instapundit)…

…The more-discussed change that Obama imposed was a reduction in the cap of disposable income that some former students had to pay.  The Atlantic explains that this modifies a program currently in place to cap some at 15%, which has 450,000 participants at the moment.  However, that program also has a max income cap that participants can’t exceed — and it’s not likely that the expanded program will get expanded participation:

Student loan balances have really only ballooned over the past decade. So this change would affect very few Americans over the age of 32. For the young adults who it may effect, we must remember that educational attainment has some correlation to income. Those with the most debt will have attended business school, medical school, or law school. Most of those people will also have higher incomes, making them ineligible. For a person with the average student debt load, their annual income would need to be lower than $32,000** to qualify. The average income for Bachelor’s degree holders aged 25 to 34 is $40,100.

The complete article is at HotAir.com

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